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UBS analyst Steve Milunovich late Thursday issued a cautionary research note on Apple shares, maintaining his Buy rating but trimming his estimates and reducing his target to $700 from $780.

The analyst notes that his December quarter numbers haven't changed much, but he trimmed his iPhone forecast by 5 million for each of the next three quarters, while trimming his iPad outlook by 2 million for those same quarters. His September 2013 fiscal year profit outlook drops to $47 a share from $51.50; for FY 2014, he goes to $55.85, from $62.

The UBS analyst offers several reason for the estimate cuts:

Supply chain checks indicate the iPhone build rate is falling to 25 million units for the Mar quarter (he models 40 million total iPhone shipments for the quarter.)

Milunovich reports that "some of our Chinese sources do not expect the iPhone 5 to do as well as the iPhone 4S."

The Mini may be cannibalizing the larger iPad "and sustaining a 20 million iPad run rate isn’t easy."

Previous growth estimates "seem aggressive given the European economy and tougher handset competition."

He is quick to add that while estimates may need to come down, the story isn't over. "We expect that China Mobile may start to sell iPhones in the December quarter, so a summer 5S with TD-SCDMA and fingerprint recognition is possible," he writes. "Apple is driven to make beautiful products. Whether it is an iTV, wearable computers, or another new product category, we have faith that innovation is not dead."

Apple on Thursday fell $9.31, or 1.7%, to $529.69; in the after hours session, the stock fell another $2.57, to $527.12.